Mouse mammary tumor virus induces mammary cancer by the activation of cellular proto-oncogenes, primarily those of the wnt family. Deregulation of the proto-oncogene promoter involves three critical features: (1) activation occurs in a tissue-specific manner, (2) the activating provirus can reside at large distance from the target promoter (> 10 kb), and (3) activation of the target promoter is hormone- independent. We have identified an enhancer element in the mouse mammary tumor virus (MMTV) long terminal repeat (LTR) that is likely to be involved in proto-oncogene activation. This element is found at the 5' end of the LTR, and is located on a 100 bp fragment bounded by Ban2 restriction sites. The Ban2 enhancer will activate heterologous promoters in a cell-specific manner. We have characterized four factors that are active at this enhancer: mp4, mp5, F3 and F12. One of these proteins, mp5, was found to be a member of the AP2 transcription factor family. In cells that do not contain endogenous AP2 activity (such as Hep-G2), activity of the Ban2 enhancer is completely dependent on coexpression of AP2. This regulatory element plays a role in high-level expression of MMTV in mammary cells, and is likely to be involved in proto-oncogene activation. It has recently been reported that the AP2 factor is an important element in the regulation of the c-erbB2 oncogene in human breast cancer; these results suggest that AP2 is an important element of transcriptional regulatory pathways in human and murine cancer.